What changed in this filing

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Item 1. Financial Statements

2026-08-07 compared with 2026-05-07 · 102 added, 37 removed, 363 unchanged (28% of the section changed)

1 unchanged sentence

CONDENSED CONSOLIDATED BALANCE SHEET

In millions, except per share data March 31,

In millions, except per share data June 30,

2026 December 31,

47 unchanged sentences

CONDENSED CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)

Quarters Ended

Quarters Ended Six Months Ended

June 30, June 30,

In millions, except per share data 2026 2025 2026 2025

25 unchanged sentences

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)

Quarters Ended

Quarters Ended Six Months Ended

June 30, June 30,

In millions 2026 2025 2026 2025

7 unchanged sentences

benefit (expense) of $( 40 ), $ 309 , $( 97 ) and $ 445

12 237 21 307

Cash flow hedges:

2 unchanged sentences

Cash flow hedges-net of tax benefit (expense) of $( 5 ), $ 29 , $( 16 ) and $ 49

16 ( 97 ) 53 ( 164 )

Defined benefit pension plans:

3 unchanged sentences

of $ 0 , $ 0 , $( 1 ) and $ 0

( 4 ) ( 13 ) — ( 20 )

Total other comprehensive income (loss), net of tax 24 127 74 123

2 unchanged sentences

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)

Quarters Ended

Quarters Ended Six Months Ended

June 30, June 30,

In millions 2026 2025 2026 2025

17 unchanged sentences

Financing activities

Net short-term borrowings ( 791 ) ( 792 )

Net short-term borrowings (repayments) 492 597 ( 299 ) ( 195 )

Long-term financing issuances — 1,403 1,159 2,901

11 unchanged sentences

CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (UNAUDITED)

For the quarter ended March 31, 2025

For the six months ended June 30, 2025

issued Accumulated other

18 unchanged sentences

Stock option exercises and other 131 1.6 57 188

Balance at March 31, 2025 1,660.6 $ 17 $ 9,423 $ 67,436 $ ( 400 ) $ 52 $ ( 2,209 ) $ ( 945.6 ) $ ( 77,773 ) $ ( 3,454 )

For the quarter ended March 31, 2026

Balance at June 30, 2025 1,660.6 $ 17 $ 9,500 $ 68,424 $ ( 413 ) $ ( 45 ) $ ( 1,972 ) ( 947.0 ) $ ( 78,271 ) $ ( 2,760 )

For the six months ended June 30, 2026

issued Accumulated other

18 unchanged sentences

Stock option exercises and other 101 1.2 41 142

Balance at June 30, 2026 1,660.6 $ 17 $ 9,841 $ 71,987 $ ( 432 ) $ 66 $ ( 1,974 ) ( 953.0 ) $ ( 80,527 ) $ ( 1,023 )

See Notes to Condensed Consolidated Financial Statements.

CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (UNAUDITED)

For the quarter ended June 30, 2025

issued Accumulated other

comprehensive income (loss) Common stock in

treasury Total

shareholders’

equity (deficit)

capital Retained

earnings Pensions Cash flow

hedges Foreign

In millions, except per share data Shares Amount Shares Amount

Balance at March 31, 2025 1,660.6 $ 17 $ 9,423 $ 67,436 $ ( 400 ) $ 52 $ ( 2,209 ) ( 945.6 ) $ ( 77,773 ) $ ( 3,454 )

Net income 2,253 2,253

Other comprehensive income (loss),

net of tax ( 13 ) ( 97 ) 237 127

Comprehensive income 2,380

Common stock cash dividends

($ 1.77 per share)

( 1,265 ) ( 1,265 )

Treasury stock purchases ( 1.7 ) ( 506 ) ( 506 )

Share-based compensation 44 44

Stock option exercises and other 33 0.2 8 41

Balance at June 30, 2025 1,660.6 $ 17 $ 9,500 $ 68,424 $ ( 413 ) $ ( 45 ) $ ( 1,972 ) ( 947.0 ) $ ( 78,271 ) $ ( 2,760 )

For the quarter ended June 30, 2026

issued Accumulated other

comprehensive income (loss) Common stock in

treasury Total

shareholders’

equity (deficit)

capital Retained

earnings Pensions Cash flow

hedges Foreign

In millions, except per share data Shares Amount Shares Amount

Balance at March 31, 2026 1,660.6 $ 17 $ 9,792 $ 70,942 $ ( 428 ) $ 50 $ ( 1,986 ) ( 950.2 ) $ ( 79,673 ) $ ( 1,286 )

Net income 2,362 2,362

Other comprehensive income (loss),

net of tax ( 4 ) 16 12 24

Comprehensive income 2,386

Common stock cash dividends

($ 1.86 per share)

( 1,317 ) ( 1,317 )

Treasury stock purchases ( 2.9 ) ( 858 ) ( 858 )

Share-based compensation 39 39

Stock option exercises and other 10 0.1 4 14

Balance at June 30, 2026 1,660.6 $ 17 $ 9,841 $ 71,987 $ ( 432 ) $ 66 $ ( 1,974 ) ( 953.0 ) $ ( 80,527 ) $ ( 1,023 )

See Notes to Condensed Consolidated Financial Statements.

4 unchanged sentences

In the opinion of management, all normal recurring adjustments necessary for a fair presentation have been included.

The results for the quarter ended March 31, 2026 do not necessarily indicate the results that may be expected for the full year.

The results for the quarter and six months ended June 30, 2026 do not necessarily indicate the results that may be expected for the full year.

Certain columns and rows within the financial statements and tables presented may not add due to rounding.

2 unchanged sentences

The following table presents restaurant information by ownership type:

Restaurants at March 31, 2026 2025

Restaurants at June 30, 2026 2025

Conventional franchised 22,722 22,171

7 unchanged sentences

Diluted earnings per common share is calculated as net income divided by diluted weighted-average shares.

Diluted weighted-average shares include weighted-average shares outstanding plus the dilutive effect of share-based compensation, calculated using the treasury stock method, of 2.8 million shares and 3.3 million shares for the quarters ended March 31, 2026 and March 31, 2025, respectively.

Share-based compensation awards that would have been antidilutive, and therefore were not included in the calculation of diluted weighted-average shares, totaled 3.0 million shares and 2.2 million shares for the quarters ended March 31, 2026 and March 31, 2025, respectively.

Diluted weighted-average shares include weighted-average shares outstanding plus the dilutive effect of share-based compensation, calculated using the treasury stock method, of 2.0 million shares and 3.1 million shares for the quarters ended June 30, 2026 and 2025, respectively, and 2.4 million shares and 3.2 million shares for the six months ended June 30, 2026 and 2025, respectively.

Share-based compensation awards that would have been antidilutive, and therefore were not included in the calculation of diluted weighted-average shares, totaled 3.6 million shares and 1.9 million shares for the quarters ended June 30, 2026 and 2025, respectively, and 3.2 million shares and 2.0 million shares for the six months ended June 30, 2026 and 2025, respectively.

Recent Accounting Pronouncements

18 unchanged sentences

Accelerating the Organization is designed to unlock further growth as the Company focuses on becoming faster, more innovative and more efficient for its customers and people.

The Company incurred $ 47 million and $ 66 million of restructuring charges related to Accelerating the Organization in the three months ended March 31, 2026 and 2025, respectively.

The Company incurred $ 98 million and $ 109 million of restructuring charges related to Accelerating the Organization in the six months ended June 30, 2026 and 2025, respectively.

These restructuring charges were recorded in the Other operating (income) expense, net line within the Condensed Consolidated Statement of Income.

7 unchanged sentences

Accrued Balance at March 31, 2026 $ 36 $ 4 $ 15 $ 55

Of the $ 47 million of restructuring charges incurred in the three months ended March 31, 2026, $ 46 million was recorded primarily at Corporate and $ 1 million was recorded in the International Operated Markets.

Substantially all of the accrued restructuring balance recorded at March 31, 2026, related to the Company's Accelerating the Organization initiative, is expected to be paid out over the next twelve months.

Restructuring costs incurred — — 51 51

Cash payments ( 3 ) ( 1 ) ( 58 ) ( 62 )

Other non-cash items — — — —

Accrued Balance at June 30, 2026 $ 33 $ 3 $ 8 $ 44

Of the $ 98 million of restructuring charges incurred in the six months ended June 30, 2026, $ 97 million was recorded primarily at Corporate and $ 1 million was recorded in the International Operated Markets.

Substantially all of the accrued restructuring balance recorded at June 30, 2026, related to the Company's Accelerating the Organization initiative, is expected to be paid out over the next twelve months.

The Company continues to evolve its ways of working by driving efficiency and effectiveness across the organization, primarily led by its Global Business Services ("GBS") organization.

12 unchanged sentences

The following table summarizes the amounts related to the Company’s primary equity method investees during the periods presented.

March 31, 2026 December 31, 2025

June 30, 2026 December 31, 2025

In Millions Percentage Ownership Fair Value (Level 1) Carrying Amount Percentage Ownership Fair Value (Level 1) Carrying Amount

1 unchanged sentence

McDonald's Japan Holdings Co., Ltd 35 % $ 2,161 $ 658 35 % $ 1,915 $ 657

As of March 31, 2026, the aggregate carrying amount of the Company's investments in these equity method investees exceeded its proportionate share of the net assets of these equity method investees by $ 1.4 billion.

As of June 30, 2026, the aggregate carrying amount of the Company's investments in these equity method investees exceeded its proportionate share of the net assets of these equity method investees by $ 1.4 billion.

This difference is not amortized.

Management has concluded that there are no indicators of impairment related to these investments.

The following table summarizes the amounts recorded related to the Company's primary equity method investments during the three months ended March 31, 2026 and 2025, respectively.

Quarters Ended March 31,

The following table summarizes the amounts recorded related to the Company's primary equity method investments during the six months ended June 30, 2026 and 2025, respectively.

Six Months Ended June 30,

In Millions 2026 2025

3 unchanged sentences

Dividends received $ 17 $ 15

The effective income tax rate was 22.0 % and 19.8 % for the three months ended March 31, 2026 and 2025, respectively.

The effective tax rate for the three months ended March 31, 2025 reflected income tax benefits related to restructuring initiatives.

The effective income tax rate was 19.5 % and 21.3 % for the quarters ended 2026 and 2025, respectively, and 20.7 % and 20.6 % for the six months ended 2026 and 2025, respectively.

The effective tax rate for the quarter ended June 30, 2026 reflected discrete income tax benefits related to restructuring initiatives.

Fair Value Measurements

6 unchanged sentences

There were no significant changes to the valuation techniques used to measure fair value as described in the Company's December 31, 2025 Annual Report on Form 10-K.

At March 31, 2026, the fair value of the Company’s debt obligations was estimated at $ 38.2 billion, compared to a carrying amount of $ 40.1 billion.

At June 30, 2026, the fair value of the Company’s debt obligations was estimated at $ 38.3 billion, compared to a carrying amount of $ 39.9 billion.

The fair value of debt obligations is based upon quoted market prices, classified as Level 2 within the valuation hierarchy.

6 unchanged sentences

Derivative Assets Derivative Liabilities

In millions Balance Sheet Classification March 31, 2026 December 31, 2025 Balance Sheet Classification March 31, 2026 December 31, 2025

In millions Balance Sheet Classification June 30, 2026 December 31, 2025 Balance Sheet Classification June 30, 2026 December 31, 2025

Derivatives designated as hedging instruments

Foreign currency Prepaid expenses and other current assets $ 58 $ 3 Accrued payroll and other liabilities $ ( 14 ) $ ( 117 )

Interest rate Prepaid expenses and other current assets — — Accrued payroll and other liabilities ( 12 ) —

Foreign currency Miscellaneous other assets 37 24 Other long-term liabilities ( 3 ) ( 12 )

6 unchanged sentences

Total derivatives $ 161 $ 131 $ ( 29 ) $ ( 145 )

The following table presents the pre-tax amounts from derivative instruments affecting income and AOCI for the three months ended March 31, 2026 and 2025, respectively:

The following table presents the pre-tax amounts from derivative instruments affecting income and AOCI for the six months ended June 30, 2026 and 2025, respectively:

Location of gain or loss

20 unchanged sentences

The Company enters into fair value hedges that convert a portion of its fixed rate debt into floating rate debt by use of interest rate swaps.

At March 31, 2026, the carrying amount of fixed-rate debt that was effectively converted was an equivalent notional amount of $ 486 million, which included a decrease of $ 14 million of cumulative hedging adjustments.

For the three months ended March 31, 2026, the Company recognized an $ 2 million gain on the fair value of interest rate swaps, and a corresponding loss on the fair value of the related hedged debt instrument to interest expense.

At June 30, 2026, the carrying amount of fixed-rate debt that was effectively converted was an equivalent notional amount of $ 488 million, which included a decrease of $ 12 million of cumulative hedging adjustments.

For the six months ended June 30, 2026, the Company recognized a $ 4 million gain on the fair value of interest rate swaps, and a corresponding loss on the fair value of the related hedged debt instrument to interest expense.

Cash Flow Hedges

2 unchanged sentences

The hedges cover up to the next 18 months for certain exposures and are denominated in various currencies.

As of March 31, 2026, the Company had derivatives outstanding with an equivalent notional amount of $ 2.4 billion that hedged a portion of forecasted foreign currency denominated cash flows.

Based on market conditions at March 31, 2026, the $ 37 million in cumulative cash flow hedging gains, after tax, is not expected to have a significant effect on the Company's earnings over the next 12 months.

As of June 30, 2026, the Company had derivatives outstanding with an equivalent notional amount of $ 2.4 billion that hedged a portion of forecasted foreign currency denominated cash flows.

Based on market conditions at June 30, 2026, the $ 66 million in cumulative cash flow hedging gains, after tax, is not expected to have a significant effect on the Company's earnings over the next 12 months.

Net Investment Hedges

1 unchanged sentence

Realized and unrealized translation adjustments from these hedges are included in shareholders' equity in the foreign currency translation component of Other comprehensive income ("OCI") and offset translation adjustments on the underlying net assets of foreign subsidiaries and affiliates, which also are recorded in OCI.

As of March 31, 2026, $ 16.5 billion of the Company's third-party foreign currency denominated debt, and $ 1.8 billion of foreign currency derivatives were designated to hedge investments in certain foreign subsidiaries and affiliates.

As of June 30, 2026, $ 15.4 billion of the Company's third-party foreign currency denominated debt, and $ 1.3 billion of foreign currency derivatives were designated to hedge investments in certain foreign subsidiaries and affiliates.

Undesignated Derivatives

7 unchanged sentences

The Company is exposed to credit-related losses in the event of non-performance by its derivative counterparties.

The Company did not have significant exposure to any individual counterparty at March 31, 2026 and has master agreements that contain netting arrangements.

The Company did not have significant exposure to any individual counterparty at June 30, 2026 and has master agreements that contain netting arrangements.

For financial reporting purposes, the Company presents gross derivative balances in its financial statements and supplementary data, including for counterparties subject to netting arrangements.

Some of these agreements also require each party to post collateral if credit ratings fall below, or aggregate exposures exceed, certain contractual limits.

At March 31, 2026, the Company was required to post $ 88 million of collateral due to the negative fair value of certain derivative positions.

At June 30, 2026, the Company was required to post $ 56 million of collateral due to the negative fair value of certain derivative positions.

Franchise Arrangements

Revenues from franchised restaurants consisted of:

Quarters Ended

Quarters Ended Six Months Ended

June 30, June 30,

In millions 2026 2025 2026 2025

6 unchanged sentences

segment - the Company's largest market.

The segment is 95 % franchised as of March 31, 2026.

The segment is 95 % franchised as of June 30, 2026.

• International Operated Markets segment - comprised of markets, or countries in which the Company owns and operates and franchises restaurants, including Australia, Canada, France, Germany, Italy, Poland, Spain and the U.K.

The segment is 89 % franchised as of March 31, 2026 .

The segment is 90 % franchised as of June 30, 2026.

• International Developmental Licensed Markets & Corporate - comprised primarily of developmental licensee and affiliate markets in the McDonald’s System, including equity method investments in China and Japan, as well as Corporate activities.

The International Developmental Licensed Markets are 99 % franchised as of March 31, 2026.

The International Developmental Licensed Markets are 99 % franchised as of June 30, 2026.

The Company's chief operating decision makers ("CODMs") are the President and Chief Executive Officer ("CEO") and the Executive Vice President and Global Chief Financial Officer ("CFO").

4 unchanged sentences

Corporate assets include cash and equivalents, financial instruments, deferred tax assets and office facilities.

Quarters Ended

Quarters Ended Six Months Ended

June 30, June 30,

In millions 2026 2025 2026 2025

3 unchanged sentences

Total Revenues $ 7,099 $ 6,843 $ 13,616 $ 12,799

$ 320 $ 325 $ 643 $ 643

International Operated Markets 359 328 712 630

1 unchanged sentence

Total Franchised restaurants-occupancy expenses $ 680 $ 654 $ 1,356 $ 1,274

$ 693 $ 694 $ 1,362 $ 1,339

International Operated Markets 1,322 1,286 2,577 2,409

1 unchanged sentence

Total Company-operated restaurant expenses $ 2,138 $ 2,078 $ 4,170 $ 3,937

$ 147 $ 149 $ 287 $ 292

International Operated Markets 190 174 378 335

1 unchanged sentence

Total Selling, general, & administrative expenses $ 817 $ 700 $ 1,576 $ 1,383

$ 93 $ 85 $ 164 $ 172

International Operated Markets 8 38 31 80

5 unchanged sentences

Total Operating income $ 3,338 $ 3,232 $ 6,292 $ 5,880

$ 357 $ 318 $ 631 $ 543

International Operated Markets 466 418 868 739

1 unchanged sentence

Total Capital expenditures $ 831 $ 744 $ 1,516 $ 1,295

$ 246 $ 252 $ 497 $ 493

International Operated Markets 217 196 430 378

1 unchanged sentence

Total Depreciation & amortization** $ 565 $ 544 $ 1,131 $ 1,064

In millions March 31, 2026 December 31, 2025

In millions June 30, 2026 December 31, 2025

$ 23,189 $ 23,008

6 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements